Treasurys Slaughtered, Auctioned and Twisted

By Mark Gongloff

FactSet

10-year Treasury yields. Click for gigante image.

If Treasury bonds were capable of making wishes, they might wish they could take another day off.

The Treasury market is getting pummeled over the head with a metal folding chair today. Apparently, there is no longer any need for the safe haven of US government debt, now that Europe and the US economy are all sorted forever.

More concretely, there is also the issue of a 3-year Treasury auction coming up in a couple of hours. Traders are driving up Treasury yields to make them more attractive so that people will buy them, helping the government borrow more money. Behold, logic!

And at some point, if interest rates and stocks keep rising much further, we may have to visit the question of whether Operation Twist is doing exactly the same thing QE2 did — namely, driving investors into riskier assets and out of Treasurys, pushing interest rates higher in defiance of what people, and let’s call those people “Bill Gross,” expected.

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